Are these passive income stocks worth exploring in 2023?

Kalkine Media - Summary

• Dividend stocks are a source of stable income and long-term revenue generation.
• CNR pays its shareholders quarterly dividend of C$ 0.79.
• FTS pays its shareholders a quarterly dividend of C$ 0.565.

Dividend stocks can help build long-term wealth, which is why these stocks are often included in investors’ portfolios. The interesting feature of dividend stocks is that apart from offering part ownership in a company, these stocks also come with a stable income paid at regular intervals.

At the same time, dividend stocks do not have much growth potential as they are generally issued by well-recognised large-cap companies. The stock prices of these large companies are generally stable and do not have much volatility.

Overall, the stability offered by dividend stocks, along with the relatively lower risk associated with them, makes dividend stocks an attractive choice. Additionally, stocks with growing dividend yields may provide a hedge against inflation. However, there is no guarantee in an equity market therefore research and analysis is of utmost importance before investing in any stock.

Here are two TSX-listed dividend stocks to explore:

Canadian National Railway (TSX:CNR) Company (TSX: CNR) Canadian National Railway is one of the most prominent transportation and logistics providers in North America. The company pays a quarterly dividend of C$ 0.79. The company’s dividend yield is 1.972%, while its P/E ratio is 21.10.

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The company recently announced that it moved over 2.4 million metric tonnes of grain, perhaps one of the most significant grain movements in Western Canada ever. CN Railways achieved this feat due to its improved collaborations between the company, its customers and supply chain partners.

The company announced its annual revenue of C$ 17.107 billion in 2022. The quarterly financials showed constant revenue gains as the company reported total revenue of C$ 4.542 billion in December 2022 quarter, compared to C$ 4.513 billion in the September 2022 quarter.

Fortis (TSX:FTS) Inc. (TSX: FTS) Fortis is an energy generation company with C$ 64 billion in assets (as of December 31, 2022), Fortis focuses on safely transmitting electricity and natural gas across 17 jurisdictions. Fortis pays a quarterly dividend of C$ 0.565 with a dividend yield of 4.212%. Its P/E ratio is 19.20.

In 2022, the company reported net earnings of C$ 1.3 billion, or C$ 2.78 per common share. Meanwhile, the adjusted net earnings per common share rose 7% from C$ 2.59 in 2021 to C$ 2.78 in 2022.

The quarterly results showed that the net earnings were C$ 370 million for the fourth quarter of 2022. This amounted to 0.77 per common share. Meanwhile, the net earnings for the same period in 2021 were C$328 million or C$ 0.69 per common share. The company reported the revenue hike due to rate base growth, increased retail sales and higher hydroelectric production in Belize.

Some of the other factors that also contributed to the increased revenue included higher foreign exchange rates and lower stock-based compensation costs. At the same time, the company also reported increased corporate costs, which offset these gains to some extent.

Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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